The number of people in work was still up by 279,000 on a year ago, the ONS said.
Photograph: Chris J Ratcliffe/AFP/Getty Images

Signs that Britain’s long employment boom has come to an end emerged on Wednesday as official figures showed a drop in the number of people in work, a fall in full-time employment and a decline in the number of job vacancies.

The ONS said the number of people employed had fallen by 14,000 in the three months to September to just over 32 million.

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While the number of people in work was still up by 279,000 on a year ago, the ONS said it was the first fall since the slight reduction in the quarter ending in October 2016 and the biggest drop since the April to June period of 2015. The employment rate was cut from 75.1% to 75%.

Further evidence of a weaker labour market came from a fall in job vacancies, a 29,000 decline in the number of full-time jobs and an increase in the number of part-time workers saying that they would like to have full-time employment.

The number of people unemployed fell by 59,000 in the three months to September, bringing the total down to 1.425 million but leaving the unemployment rate unchanged at 4.3%.

The ONS said both employment and unemployment were down due to a rise in the number of the economically inactive – people who have stopped looking for work.

Damian Hinds, the employment minister, said: “The strength of the economy is driving an increase in full-time, permanent jobs and a near-record number of people are now in work thanks to the government’s welfare reforms.

“When unemployment fell to 5% early last year, many people thought it couldn’t get much lower, and yet it now stands at 4.3%.”

But with growth in earnings lagging well behind the current inflation rate, the TUC general secretary, Frances O’Grady, said the government should raise the national minimum wage to £10 an hour as quickly as possible.

“This is the seventh month in a row that prices have risen faster than wages. But ministers are still standing on the side-lines,” O’Grady said.

Earnings excluding bonuses were 2.2% higher in the three months ending in September than they were in the same three months of 2016 – no change on the upwardly revised figures for the period ending in August. City analysts said the lack of any acceleration in earnings growth eased the pressure on the Bank of England to increase the cost of borrowing following the quarter-point rise to 0.5% earlier this month.

The slowdown in employment coupled with modest growth in the economy’s output resulted in a sharp improvement in the UK’s productivity rate, which was up by 0.9% between the second and third quarters of 2017 – its fastest rate of increase in six years.

John Philpott, director of the Jobs Economist, an economic consultancy, said: “The latest jobs and productivity figures suggest that UK employers are finally having to respond to much tighter labour market conditions as the economy edges closer to full employment. Although the economy continued to grow, there was no net hiring in the third quarter of the year, with businesses cutting full-time jobs and switching to increased use of part-time workers.”

The ONS statistician Matt Hughes said: “After two years of almost uninterrupted growth, employment has declined slightly on the quarter.

“However, it remains higher than it was this time last year, and as always we would caution people against reading too much into one quarter’s data. Unemployment also fell on the quarter, but there was a rise in the number of people who were neither working nor looking for a job – so-called economically inactive people.”

Nigel Meager, director of the Institute for Employment Studies thinktank, said: “It is notable that the other main indicator of worklessness in the working-age population (economic inactivity) has been increasing recently to 21.6%. Indeed, today’s statistics release shows the largest quarterly increase in economic inactivity since the three months to January 2010. While it is early days, and the next few months’ statistics will be needed to confirm this, these data certainly raise the question of whether the long and sustained recent labour market boom is finally running out of steam.”

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